OPEN TEXT CORPORATION 
By WATERLOO, Ontario, Jan. 23, 2014 /PRNewswire/ -- Open Text Corporation (NASDAQ: OTEX) (TSX: OTC) announced today its financial results for the second quarter ended December 31, 2013.
Financial Highlights for Q2 FY14 (1)
-- Total revenue was $363.5 million, up 3% Y/Y
-- License revenue was $81.2 million, up 7% Y/Y
-- Customer Support revenue was $174.4 million, up 6% Y/Y
-- Non-GAAP-based EPS, diluted was $1.58 compared to $1.58, flat Y/Y;
GAAP-based EPS, diluted was $0.90 compared to $1.04 Y/Y ((2))
-- Non-GAAP-based income from operations was $112.3 million and 31% of
revenues; GAAP-based income from operations was $73.9 million and 20% of
revenues ((2))
-- Operating cash flow was $60.9 million, compared to $74.7 million Y/Y,
down 19%Y/Y, with an ending cash balance of $515.4 million.
"The OpenText product lineup has never been stronger with our Enterprise Suites for EIM, AppWorks for Developers and now GXS for B2B integration," said OpenText CEO Mark J. Barrenechea. "We are committed to leading Enterprise Information Management with the best products and cloud-based services. The OpenText Cloud now manages over 16 billion transactions per year, approximately 600,000 trading partners and 40,000 customers. I am pleased with our progress that includes 7% year over year license growth."
Business Highlights
-- OpenText buys GXS, a Maryland-based leader in business-to-business (B2B)
cloud integration
-- Financial, services and public sector industries saw the most demand
-- 6 license transactions over $1 million and 15 license transactions
between $500K and $1 million
-- Hosted OpenText Enterprise World 2013, the Company's largest conference
ever; launched seven product suites and developer platform AppWorks
-- Customer successes in the quarter include CZ, Home Trust, Sobeys Inc.,
Insurance Corporation of British Columbia, Fox Entertainment Group, MMM
Group, Qatar University and iGATE-CHCS Services, Inc.
-- OpenText begins to ship integration suites as part of Project Red Oxygen
-- Unveiled new generation of web-based high-performance remote application
access solution
-- Launched new secure messaging cloud services
-- Unveiled OpenText Extended ECM for Oracle E-Business Suite
-- Partnered with hybris software, an SAP company, to enhance its customer
experience management (CEM) ecosystem
-- OpenText named a leader in Document Output for Customer Communications
Management in leading analyst firm report (Forrester Research, Inc.)
Dividend Program Highlights
Stock Dividends
On January 23, 2014, we announced that our Board of Directors approved a two-for-one stock split of our outstanding Common Shares. The two-for-one stock split will be implemented by way of a stock dividend whereby shareholders will receive one Common Share for each Common Share held. The record date for the stock dividend will be February 7, 2014 and the payment date will be February 18, 2014. We are undertaking the stock split to make our Common Shares more readily accessible to individual shareholders, increase and broaden our shareholder base, and improve the liquidity of the market for our Common Shares. As of January 22, 2014 there were 60,473,680 OpenText Common Shares outstanding. Adjusting for the stock split, there will be 120,947,360 OpenText Common Shares outstanding.
Cash Dividends
As part of our quarterly, non cumulative cash dividend program we declared, on January 23, 2014 a dividend of $0.15 per Common Share (or $0.30 per Common Share on a pre stock split basis). The record date for this dividend is February 25, 2014 and the payment date is March 14, 2014. Future declarations of dividends and the establishment of future record and payment dates are subject to the final determination and discretion of our Board of Directors.
Summary
of
Quarterly
Results
---------
Q2 Q1 Q2
FY14 FY14 FY13 % Change % Change
(Q/Q) (Y/Y)
Revenue
(million) $363.5 $324.5 $352.2 12.0% 3.2%
GAAP-
based
gross
margin 70.3% 67.2% 64.8% 310 bps 550 bps
GAAP-
based
operating
margin 20.3% 16.0% 19.1% 430 bps 120 bps
GAAP-
based
EPS,
diluted $0.90 $0.52 $1.04 73.1% (13.5)%
Non-
GAAP-
based
gross
margin
(2) 74.0% 73.9% 71.5% 10 bps 250 bps
Non-
GAAP-
based
operating
margin
(2) 30.9% 30.6% 32.1% 30 bps (120) bps
Non-
GAAP-
based
EPS,
diluted
(2) $1.58 $1.37 $1.58 15.3% -%
------- ----- ----- ----- ---- ---
Summary of Year to
Date Results
------------------
Q2 Q1 Q2
FY14 FY14 FY13 % Change
(Y/Y)
Revenue (million) $688.0 $324.5 $678.4 1.4%
GAAP-based gross
margin 68.8% 67.2% 63.8% 500 bps
GAAP-based operating
margin 18.3% 16.0% 15.8% 250 bps
GAAP-based EPS,
diluted $1.41 $0.52 $1.37 2.9%
Non-GAAP-based gross
margin (2) 74.0% 73.9% 70.8% 320 bps
Non-GAAP-based
operating margin (2) 30.7% 30.6% 30.5% 20 bps
Non-GAAP-based EPS,
diluted (2) $2.95 $1.37 $2.89 2.1%
------------------- ----- ----- ----- ---
Conference Call Information
The public is invited to listen to the earnings conference call today at 5:00 p.m. ET (2:00 p.m. PT) by dialing 1-800-814-4859 (toll-free) or 416-644-3414 (international). Please dial-in 15 minutes ahead of time to ensure proper connection. Alternatively, a live webcast of the earnings conference call will be available on the Investor Relations section of the Company's website at http://investors.opentext.com/events.cfm
An audio replay of the conference call will also be made available approximately two hours after the conclusion of the call. The audio replay will remain available until 11:59 p.m. on February 6, 2014 and can be accessed by dialing 1-877-289-8525 (toll-free) or 416-640-1917 (international) and entering the confirmation code: 4661601 followed by the number sign.
Please see below note (2) for a reconciliation of non-U.S. GAAP-based financial measures used in this press release, to U.S. GAAP-based financial measures.
About OpenText
OpenText is the largest independent software provider of Enterprise Information Management (EIM). For more information please visit www.opentext.com.
Cautionary Statement Regarding Forward-Looking Statements
Certain statements in this press release, including statements about the focus of Open Text Corporation ("OpenText" or "the Company") in Fiscal 2014 on growth in earnings and cash flows, creating value through investments in broader Enterprise Information Management (EIM) capabilities, distribution, the Company's presence in the cloud and in growth markets, its financial conditions, results of operations and earnings, declaration of quarterly dividends, and other matters, may contain words such as "anticipates", "expects", "intends", "plans", "believes", "seeks", "estimates", "may", "could", "would", and other similar language and are considered forward-looking statements or information under applicable securities laws. In addition, any information or statements that refer to expectations, beliefs, plans, projections, objectives, performance or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking, and based on our current expectations, forecasts and projections about the operating environment, economies and markets in which we operate. Such forward-looking statements involve known and unknown risks, uncertainties and other factors and assumptions that may cause the actual results, performance or achievements to differ materially. Such factors include, but are not limited to: (i) the future performance, financial and otherwise, of OpenText; (ii) the ability of OpenText to bring new products to market and to increase sales; (iii) the strength of the Company's product development pipeline; (iv) the Company's growth and profitability prospects; (v) the estimated size and growth prospects of the EIM market; (vi) the Company's competitive position in the EIM market and its ability to take advantage of future opportunities in this market; (vii) the benefits of the Company's products to be realized by customers; (viii) the demand for the Company's product and the extent of deployment of the Company's products in the EIM marketplace; and (ix) the Company's financial condition and capital requirements. The risks and uncertainties that may affect forward-looking statements include, but are not limited to: (i) integration of acquisitions and related restructuring efforts, including the quantum of restructuring charges and the timing thereof; (ii) the possibility that the Company may be unable to meet its future reporting requirements under the Exchange Act, and the rules promulgated thereunder; (iii) the risks associated with bringing new products to market; (iv) fluctuations in currency exchange rates; (v) delays in the purchasing decisions of the Company's customers; (vi) the competition the Company faces in its industry and/or marketplace; (vii) the possibility of technical, logistical or planning issues in connection with the deployment of the Company's products or services; (viii) the continuous commitment of the Company's customers; and (ix) demand for the Company's products. For additional information with respect to risks and other factors which could occur, see the Company's Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and other securities filings with the Securities and Exchange Commission (SEC) and other securities regulators. Readers are cautioned not to place undue reliance upon any such forward-looking statements, which speak only as of the date made. Unless otherwise required by applicable securities laws, the Company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
OTEX-F
For more information, please contact:
United States:
Greg Secord
Vice President, Investor Relations
Open Text Corporation
San Francisco: 415-963-0825
gsecord@opentext.com
Canada:
Sonya Mehan
Senior Manager, Investor Relations
Open Text Corporation
Waterloo: 519-888-7111 ext. 2446
smehan@opentext.com
Copyright ©2014 Open Text Corporation. OpenText is a trademark or registered trademark of Open Text SA and/or Open Text ULC. The list of trademarks is not exhaustive of other trademarks, registered trademarks, product names, company names, brands and service names mentioned herein are property of Open Text SA or other respective owners. All rights reserved. For more information, visit: http://www.opentext.com/2/global/site-copyright.html_SKU.
OPEN TEXT CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands of U.S. dollars, except share data)
December 31, 2013 June 30, 2013
----------------- -------------
(Unaudited)
ASSETS
Cash and
cash
equivalents $515,354 $470,445
Accounts
receivable and $4,871
trade, net as of June
of 30, 2013
allowance
for
doubtful
accounts of
$3,937 as
of December
31, 2013 173,347 174,927
Income taxes
recoverable 14,048 17,173
Prepaid
expenses
and other
current
assets 48,348 43,464
Deferred tax
assets 10,671 11,082
------ ------
Total
current
assets 761,768 717,091
Property and
equipment 96,737 88,364
Goodwill 1,267,317 1,246,872
Acquired
intangible
assets 324,185 363,615
Deferred tax
assets 133,502 135,695
Other assets 26,648 25,082
Deferred
charges 60,005 67,633
Long-term
income
taxes
recoverable 10,560 10,465
Total assets $2,680,722 $2,654,817
========== ==========
LIABILITIES AND SHAREHOLDERS'
EQUITY
Current liabilities:
Accounts
payable and
accrued
liabilities $188,896 $188,443
Current
portion of
long-term
debt 54,994 51,742
Deferred
revenues 246,738 282,387
Income taxes
payable 6,494 4,184
Deferred tax
liabilities 1,150 1,127
----- -----
Total
current
liabilities 498,272 527,883
Long-term liabilities:
Accrued
liabilities 19,344 17,849
Deferred
credits 18,401 11,608
Pension
liability 25,062 24,509
Long-term
debt 491,250 513,750
Deferred
revenues 13,014 11,830
Long-term
income
taxes
payable 146,848 140,508
Deferred tax
liabilities 62,245 69,672
------ ------
Total long-
term
liabilities 776,164 789,726
Shareholders' equity:
Share capital
59,159,544
and respectively;
59,028,886 Authorized
Common Common
Shares Shares:
issued and unlimited
outstanding
at December
31, 2013
and June
30, 2013, 656,901 651,642
Additional
paid-in
capital 105,281 101,865
Accumulated
other
comprehensive
income 42,677 39,890
Retained
earnings 621,547 572,885
Treasury
stock, at
cost
(416,707
shares at
December
31, 2013
and 610,878
at June 30,
2013,
respectively) (20,120) (29,074)
------- -------
Total
shareholders'
equity 1,406,286 1,337,208
Total
liabilities
and
shareholders'
equity $2,680,722 $2,654,817
========== ==========
OPEN TEXT CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands of U.S. dollars, except share and per share data)
(unaudited)
Three Months Six Months
Ended Ended
December 31, December 31,
------------ ------------
2013 2012 2013 2012
---- ---- ---- ----
Revenues:
License $81,164 $76,125 $136,470 $131,781
Cloud
services 42,131 44,842 83,778 88,715
Customer
support 174,425 164,658 342,865 326,754
Professional
service
and
other 65,787 66,555 124,854 131,124
------ ------ ------- -------
Total
revenues 363,507 352,180 687,967 678,374
------- ------- ------- -------
Cost
of
revenues:
License 3,304 5,331 6,340 9,499
Cloud
services 15,963 17,946 30,228 35,928
Customer
support 24,409 28,277 46,579 54,100
Professional
service
and
other 51,245 49,242 96,680 99,294
Amortization
of
acquired
technology-
based
intangible
assets 13,035 23,191 34,565 46,973
------ ------ ------ ------
Total
cost
of
revenues 107,956 123,987 214,392 245,794
------- ------- ------- -------
Gross
profit 255,551 228,193 473,575 432,580
------- ------- ------- -------
Operating
expenses:
Research
and
development 41,917 38,718 82,133 78,624
Sales
and
marketing 81,290 67,977 150,703 132,492
General
and
administrative 32,815 28,742 61,701 55,706
Depreciation 6,898 6,105 13,356 12,214
Amortization
of
acquired
customer-
based
intangible
assets 12,432 17,147 29,709 34,399
Special
charges 6,268 2,269 9,999 11,823
----- ----- ----- ------
Total
operating
expenses 181,620 160,958 347,601 325,258
------- ------- ------- -------
Income
from
operations 73,931 67,235 125,974 107,322
------ ------ ------- -------
Other
income
(expense),
net (740) 1,541 1,186 1,470
Interest
and
other
related
expense,
net (3,040) (4,515) (7,425) (8,883)
------ ------ ------ ------
Income
before
income
taxes 70,151 64,261 119,735 99,909
Provision
for
income
taxes 16,651 3,153 35,605 19,372
------ ----- ------ ------
Net
income
for
the
period $53,500 $61,108 $84,130 $80,537
===== ===== ======= =======
Earnings
per
share-
basic $0.90 $1.04 $1.42 $1.38
===== ===== ===== =====
Earnings
per
share-
diluted $0.90 $1.04 $1.41 $1.37
===== ===== ===== =====
Weighted
average
number
of
Common
Shares
outstanding-
basic 59,136 58,503 59,100 58,473
====== ====== ====== ======
Weighted
average
number
of
Common
Shares
outstanding-
diluted 59,593 58,983 59,475 58,961
====== ====== ====== ======
Dividends
declared
per
Common
Share $0.30 $ - $0.60 $ -
===== == === ===== == ===
OPEN TEXT CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In thousands of U.S. dollars)
(unaudited)
Three Months Six Months
Ended Ended
December 31, December 31,
------------ ------------
2013 2012 2013 2012
---- ---- ---- ----
Net
income
for
the
period $53,500 $61,108 $84,130 $80,537
Other
comprehensive
income-
net of
tax:
Net
foreign
currency
translation
adjustments 113 (989) 354 (1,465)
Unrealized
gain
(loss)
on cash
flow
hedges
Unrealized
gain
(loss) (1,433) (495) 87 2,005
(Gain)
loss
reclassified
into
net
income 589 (958) 1,173 (1,514)
Actuarial
gain
(loss)
relating
to
defined
benefit
pension
plans
Actuarial
gain
(loss) 944 (695) 1,027 (876)
Amortization
of
actuarial
loss
into
net
income 73 75 146 147
--- --- --- ---
Total
other
comprehensive
income
(loss),
net,
for
the
period 286 (3,062) 2,787 (1,703)
Total
comprehensive
income $53,786 $58,046 $86,917 $78,834
===== ===== ===== =====
OPEN TEXT CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands of U.S. dollars)
(unaudited)
Three Months Six Months
Ended Ended
December 31, December 31,
------------ ------------
2013 2012 2013 2012
---- ---- ---- ----
Cash flows from operating
activities:
Net income for the period $53,500 $61,108 $84,130 $80,537
Adjustments to reconcile net
income to net cash provided by
operating activities:
Depreciation and
amortization of
intangible assets 32,365 46,443 77,630 93,586
Share-based compensation
expense 6,677 3,174 11,289 6,276
Excess tax benefits on
share-based
compensation expense (1,008) (259) (1,081) (611)
Pension expense 309 228 539 470
Amortization of debt
issuance costs 519 535 1,044 1,072
Amortization of deferred
charges and credits 2,967 2,929 5,934 5,858
Loss on sale and write
down of property and
equipment (6) 22 15 24
Deferred taxes (1,329) (2,013) (3,198) (1,152)
Changes in operating assets and
liabilities:
Accounts receivable (19,602) 964 9,176 20,406
Prepaid expenses and
other current assets (729) (1,640) (4,161) 1,384
Income taxes (5,093) (18,261) 2,409 (13,888)
Deferred charges and
credits 5,788 - 8,488 (436)
Accounts payable and
accrued liabilities 7,375 (365) (10,595) (20,620)
Deferred revenue (21,574) (18,668) (40,134) (36,738)
Other assets 716 497 (686) 289
--- --- ---- ---
Net cash provided by
operating activities 60,875 74,694 140,799 136,457
------ ------ ------- -------
Cash flows from investing
activities:
Additions of property and
equipment (11,913) (4,879) (20,228) (9,917)
Purchase of patents (192) - (192) -
Purchase of EasyLink
Services International
Corporation, net of cash
acquired - - - (315,331)
Purchase of System
Solutions Australia Pty
Limited
(MessageManager), net of
cash acquired - (516) - (516)
Purchase of Cordys
Holding B.V., net of
cash acquired - - (30,588) -
Purchase consideration
for prior period
acquisitions (221) (214) (443) (431)
Other investing
activities 526 - (974) -
Net cash used in
investing activities (11,800) (5,609) (52,425) (326,195)
------- ------ ------- --------
Cash flows from financing
activities:
Excess tax benefits on
share-based
compensation expense 1,008 259 1,081 611
Proceeds from issuance of
Common Shares 3,606 2,409 5,429 6,402
Repayment of long-term
debt (11,419) (7,671) (19,087) (15,338)
Debt issuance costs (273) - (273) -
Payments of dividends to
shareholders (17,747) - (35,468) -
Net cash used in
financing activities (24,825) (5,003) (48,318) (8,325)
------- ------ ------- ------
Foreign exchange gain on
cash held in foreign
currencies (43) 941 4,853 5,574
Increase (decrease) in
cash and cash
equivalents during the
period 24,207 65,023 44,909 (192,489)
Cash and cash equivalents
at beginning of the
period 491,147 302,235 470,445 559,747
Cash and cash equivalents
at end of the period $515,354 $367,258 $515,354 $367,258
====== ====== ====== ========
Notes
-----
(1) All dollar amounts in this
press release are in U.S.
Dollars unless otherwise
indicated.
(2) Use of Non-GAAP Financial
Measures: In addition to
reporting financial results
in accordance with U.S. GAAP,
the Company provides certain
financial measures that are
not in accordance with U.S.
GAAP (non-GAAP).These non-
GAAP financial measures have
certain limitations in that
they do not have a
standardized meaning and thus
the Company's definition may
be different from similar
non-GAAP financial measures
used by other companies and/
or analysts and may differ
from period to period. Thus
it may be more difficult to
compare the Company's
financial performance to that
of other companies. However,
the Company's management
compensates for these
limitations by providing the
relevant disclosure of the
items excluded in the
calculation of these non-
GAAP financial measures both
in its reconciliation to the
U.S. GAAP financial measures
and its consolidated
financial statements, all of
which should be considered
when evaluating the Company's
results.
The Company uses these non-
GAAP financial measures to
supplement the information
provided in its consolidated
financial statements, which
are presented in accordance
with U.S. GAAP. The
presentation of non-GAAP
financial measures are not
meant to be a substitute for
financial measures presented
in accordance with U.S. GAAP,
but rather should be
evaluated in conjunction with
and as a supplement to such
U.S. GAAP measures. OpenText
strongly encourages investors
to review its financial
information in its entirety
and not to rely on a single
financial measure. The
Company therefore believes
that despite these
limitations, it is
appropriate to supplement the
disclosure of the U.S. GAAP
measures with certain non-
GAAP measures defined below.
Non-GAAP-based net income
and non-GAAP-based EPS are
calculated as net income or
net income per share on a
diluted basis, excluding, the
amortization of acquired
intangible assets, other
income (expense), share-
based compensation, and
special charges, all net of
tax. Non-GAAP-based gross
profit is the arithmetical
sum of GAAP-based gross
profit and the amortization
of acquired technology-based
intangible assets. Non-GAAP-
based gross margin is
calculated as non-GAAP-
based gross profit expressed
as a percentage of revenue.
Non-GAAP-based income from
operations is calculated as
income from operations,
excluding, the amortization
of acquired intangible
assets, special charges, and
share-based compensation.
Non-GAAP-based operating
margin is calculated as non-
GAAP-based income from
operations expressed as a
percentage of revenue.
The Company's management
believes that the
presentation, of the above
defined non-GAAP financial
measures, provides useful
information to investors
because they portray the
financial results of the
Company before the impact of
certain non-operational
charges. The use of the term
"non-operational charge" is
defined for this purpose as
an expense that does not
impact the ongoing operating
decisions taken by the
Company's management and is
based upon the way the
Company's management
evaluates the performance of
the Company's business for
use in the Company's internal
reports. In the course of
such evaluation and for the
purpose of making operating
decisions, the Company's
management excludes certain
items from its analysis,
including amortization of
acquired intangible assets,
special charges, share-based
compensation, other income
(expense), and the taxation
impact of these items. These
items are excluded based upon
the manner in which
management evaluates the
business of the Company and
are not excluded in the sense
that they may be used under
U.S. GAAP.
The Company believes the
provision of supplemental
non-GAAP measures allow
investors to evaluate the
operational and financial
performance of the Company's
core business using the same
evaluation measures that
management uses, and is
therefore a useful indication
of OpenText's performance or
expected performance of
future operations and
facilitates period-to-
period comparison of
operating performance
(although prior performance
is not necessarily indicative
of future performance). As a
result, the Company considers
it appropriate and reasonable
to provide, in addition to
U.S. GAAP measures,
supplementary non-GAAP
financial measures that
exclude certain items from
the presentation of its
financial results in this
press release.
The following charts provide
(unaudited) reconciliations
of U.S. GAAP-based financial
measures to non-U.S. GAAP-
based financial measures for
the following periods
presented:
Reconciliation of selected GAAP-based measures to Non-GAAP-based measures for the three months ended December 31, 2013.
(In thousands except for per share amounts)
------------------------------------------
Three Months Ended
December 31, 2013
-----------------
GAAP- GAAP-based Measures Adjustments Note Non-
based GAAP-
based Non-GAAP-based Measures
Measures % of Revenue Measures % of Revenue
-------- ------------ -------- ------------
Cost of revenues
Cloud
services $15,963 $60 (1) $16,023
Customer
support 24,409 (312) (1) 24,097
Professional
service and
other 51,245 (328) (1) 50,917
Amortization
of acquired
technology-
based
intangible
assets 13,035 (13,035) (2) -
GAAP-based
gross
profit and
gross
margin (%)
/ 255,551 70.3% 13,615 (3) 269,166 74.0%
Non-GAAP-based gross
profit and gross
margin (%)
Operating expenses
Research and
development 41,917 (794) (1) 41,123
Sales and
marketing 81,290 (1,921) (1) 79,369
General and
administrative 32,815 (3,382) (1) 29,433
Amortization
of acquired
customer-
based
intangible
assets 12,432 (12,432) (2) -
Special
charges 6,268 (6,268) (4) -
GAAP-based
income from operating
operations margin (%)
and
operating
margin (%)
/Non-
GAAP-based
income from
operations
and 73,931 20.3% 38,412 (5) 112,343 30.9%
Other income
(expense),
net (740) 740 (6) -
Provision
for
(recovery
of) income
taxes 16,651 (1,349) (7) 15,302
GAAP-based
net income
/Non-
GAAP-based
net income 53,500 40,501 (8) 94,001
GAAP-based
earnings
per share / $0.90 $0.68 (8) $1.58
Non GAAP-based
earnings per
share-diluted
(1) Adjustment relates to the
exclusion of share based
compensation expense from
our Non-GAAP-based
operating expenses as this
expense is excluded from our
internal analysis of
operating results.
(2) Adjustment relates to the
exclusion of amortization
expense from our Non-GAAP-
based operating expenses as
the timing and frequency of
amortization expense is
dependent on our
acquisitions and is hence
excluded from our internal
analysis of operating
results.
(3) GAAP-based and Non-GAAP-
based gross profit stated in
dollar, and gross margin
stated as a percentage of
revenue.
(4) Adjustment relates to the
exclusion of Special charges
from our Non-GAAP-based
operating expenses as
Special charges are
generally incurred in the
periods following the
relevant acquisitions and
are not indicative or
related to continuing
operations and are therefore
excluded from our internal
analysis of operating
results.
(5) GAAP-based and Non-GAAP-
based income from operations
stated in dollar, and
operating margin stated as a
percentage of revenue.
(6) Adjustment relates to the
exclusion of Other income
(expense) from our Non-
GAAP-based operating
expenses as Other income
(expense) relates primarily
to the transactional impact
of foreign exchange and is
generally not indicative or
related to continuing
operations and is therefore
excluded from our internal
analysis of operating
results.
(7) Adjustment relates to
differences between the
GAAP-based tax provision of
approximately 24% and a Non-
GAAP-based tax rate of 14%;
these rate differences are
due to the income tax
effects of expenses that are
excluded for the purpose of
calculating Non-GAAP-based
adjusted net income.
(8) Reconciliation of Non-GAAP-
based adjusted net income to
GAAP-based net income:
Three Months
Ended
December 31,
2013
-------------
Per share
diluted
---------
Non-GAAP-based net income $94,001 $1.58
Less:
Amortization 25,467 0.43
Share-based compensation 6,677 0.11
Special charges 6,268 0.11
Other (income) expense, net 740 0.01
GAAP-based provision for
(recovery of) income taxes 16,651 0.28
Non-GAAP-based provision
for income taxes (15,302) (0.26)
GAAP-based net income $53,500 $0.90
======= =====
Reconciliation of selected GAAP-based measures to Non-GAAP-based measures for the six months ended December 31, 2013.
(In thousands except for per share amounts)
------------------------------------------
Six Months Ended
December 31, 2013
-----------------
GAAP- GAAP-based Measures Adjustments Note Non-
based GAAP-
based Non-GAAP-based Measures
Measures % of Revenue Measures % of Revenue
-------- ------------ -------- ------------
Cost of revenues
Cloud
services $30,228 $22 (1) $30,250
Customer
support 46,579 (409) (1) 46,170
Professional
service and
other 96,680 (498) (1) 96,182
Amortization
of acquired
technology-
based
intangible
assets 34,565 (34,565) (2) -
GAAP-based
gross
profit and
gross
margin (%)
/ 473,575 68.8% 35,450 (3) 509,025 74.0%
Non-GAAP-based gross
profit and gross
margin (%)
Operating expenses
Research and
development 82,133 (1,522) (1) 80,611
Sales and
marketing 150,703 (4,274) (1) 146,429
General and
administrative 61,701 (4,608) (1) 57,093
Amortization
of acquired
customer-
based
intangible
assets 29,709 (29,709) (2) -
Special
charges 9,999 (9,999) (4) -
GAAP-based
income from operating
operations margin (%)
and
operating
margin (%)
/Non-
GAAP-based
income from
operations
and 125,974 18.3% 85,562 (5) 211,536 30.7%
Other income
(expense),
net 1,186 (1,186) (6) -
Provision
for
(recovery
of) income
taxes 35,605 (7,029) (7) 28,576
GAAP-based
net income
/Non-
GAAP-based
net income 84,130 91,405 (8) 175,535
GAAP-based
earnings
per share / $1.41 $1.54 (8) $2.95
Non GAAP-based
earnings per
share-diluted
(1) Adjustment relates to the
exclusion of share based
compensation expense from
our Non-GAAP-based
operating expenses as this
expense is excluded from our
internal analysis of
operating results.
(2) Adjustment relates to the
exclusion of amortization
expense from our Non-GAAP-
based operating expenses as
the timing and frequency of
amortization expense is
dependent on our
acquisitions and is hence
excluded from our internal
analysis of operating
results.
(3) GAAP-based and Non-GAAP-
based gross profit stated in
dollar, and gross margin
stated as a percentage of
revenue.
(4) Adjustment relates to the
exclusion of Special charges
from our Non-GAAP-based
operating expenses as
Special charges are
generally incurred in the
periods following the
relevant acquisitions and
are not indicative or
related to continuing
operations and are therefore
excluded from our internal
analysis of operating
results.
(5) GAAP-based and Non-GAAP-
based income from operations
stated in dollar, and
operating margin stated as a
percentage of revenue.
(6) Adjustment relates to the
exclusion of Other income
(expense) from our Non-
GAAP-based operating
expenses as Other income
(expense) relates primarily
to the transactional impact
of foreign exchange and is
generally not indicative or
related to continuing
operations and is therefore
excluded from our internal
analysis of operating
results.
(7) Adjustment relates to
differences between the
GAAP-based tax provision of
approximately 30% and a Non-
GAAP-based tax rate of 14%;
these rate differences are
due to the income tax
effects of expenses that are
excluded for the purpose of
calculating Non-GAAP-based
adjusted net income.
(8) Reconciliation of Non-GAAP-
based adjusted net income to
GAAP-based net income:
Six Months Ended
December 31,
2013
-------------
Per share
diluted
---------
Non-GAAP-based net income $175,535 $2.95
Less:
Amortization 64,274 1.08
Share-based compensation 11,289 0.19
Special charges 9,999 0.17
Other (income) expense, net (1,186) (0.02)
GAAP-based provision for
(recovery of) income taxes 35,605 0.60
Non-GAAP-based provision
for income taxes (28,576) (0.48)
GAAP-based net income $84,130 $1.41
======= =====
Reconciliation of selected GAAP-based measures to Non-GAAP-based measures for the three months ended September 30, 2013.
(In thousands except for per share amounts)
------------------------------------------
Three Months Ended
September 30, 2013
------------------
GAAP- GAAP-based Measures Adjustments Note Non-
based GAAP-
based Non-GAAP-based Measures
Measures % of Revenue Measures % of Revenue
-------- ------------ -------- ------------
Cost of revenues
Cloud
services $14,265 $(38) (1) $14,227
Customer
support 22,170 (97) (1) 22,073
Professional
service and
other 45,435 (170) (1) 45,265
Amortization
of acquired
technology-
based
intangible
assets 21,530 (21,530) (2) -
GAAP-based
gross
profit and
gross
margin (%)
/ 218,024 67.2% 21,835 (3) 239,859 73.9%
Non-GAAP-based gross
profit and gross
margin (%)
Operating expenses
Research and
development 40,216 (728) (1) 39,488
Sales and
marketing 69,413 (2,353) (1) 67,060
General and
administrative 28,886 (1,226) (1) 27,660
Amortization
of acquired
customer-
based
intangible
assets 17,277 (17,277) (2) -
Special
charges 3,731 (3,731) (4) -
GAAP-based
income from operating
operations margin (%)
and
operating
margin (%)
/Non-
GAAP-based
income from
operations
and 52,043 16.0% 47,150 (5) 99,193 30.6%
Other income
(expense),
net 1,926 (1,926) (6) -
Provision
for
(recovery
of) income
taxes 18,954 (5,681) (7) 13,273
GAAP-based
net income
/Non-
GAAP-based
net income 30,630 50,905 (8) 81,535
GAAP-based
earnings
per share / $0.52 $0.85 (8) $1.37
Non GAAP-based
earnings per
share-diluted
(1) Adjustment relates to the
exclusion of share based
compensation expense from
our Non-GAAP-based
operating expenses as this
expense is excluded from our
internal analysis of
operating results.
(2) Adjustment relates to the
exclusion of amortization
expense from our Non-GAAP-
based operating expenses as
the timing and frequency of
amortization expense is
dependent on our
acquisitions and is hence
excluded from our internal
analysis of operating
results.
(3) GAAP-based and Non-GAAP-
based gross profit stated in
dollar, and gross margin
stated as a percentage of
revenue.
(4) Adjustment relates to the
exclusion of Special charges
from our Non-GAAP-based
operating expenses as
Special charges are
generally incurred in the
periods following the
relevant acquisitions and
are not indicative or
related to continuing
operations and are therefore
excluded from our internal
analysis of operating
results.
(5) GAAP-based and Non-GAAP-
based income from operations
stated in dollar, and
operating margin stated as a
percentage of revenue.
(6) Adjustment relates to the
exclusion of Other income
(expense) from our Non-
GAAP-based operating
expenses as Other income
(expense) relates primarily
to the transactional impact
of foreign exchange and is
generally not indicative or
related to continuing
operations and is therefore
excluded from our internal
analysis of operating
results.
(7) Adjustment relates to
differences between the
GAAP-based tax recovery of
approximately 38% and a Non-
GAAP-based tax rate of 14%;
these rate differences are
due to the income tax
effects of expenses that are
excluded for the purpose of
calculating Non-GAAP-based
adjusted net income.
(8) Reconciliation of Non-GAAP-
based adjusted net income to
GAAP-based net income:
Three Months
Ended
September 30,
2013
--------------
Per share
diluted
---------
Non-GAAP-based net income $81,535 $1.37
Less:
Amortization 38,807 0.65
Share-based compensation 4,612 0.08
Special charges 3,731 0.06
Other (income) expense, net (1,926) (0.03)
GAAP-based provision for
(recovery of) income taxes 18,954 0.32
Non-GAAP-based provision
for income taxes (13,273) (0.23)
------- -----
GAAP-based net income $30,630 $0.52
======= =====
Reconciliation of selected GAAP-based measures to Non GAAP-based measures for the three months ended December 31, 2012.
(In thousands except for per share amounts)
------------------------------------------
Three Months Ended
December 31, 2012
-----------------
GAAP- GAAP-based Measures Adjustments Note Non-
based GAAP-
based Non-GAAP-based Measures
Measures % of Revenue Measures % of Revenue
-------- ------------ -------- ------------
Cost of revenues:
Cloud
services $17,946 $(30) (1) $17,916
Customer
support $28,277 $(107) (1) $28,170
Professional
service and
other 49,242 (188) (1) 49,054
Amortization
of acquired
technology-
based
intangible
assets 23,191 (23,191) (2) -
GAAP-based
gross
profit and
gross
margin (%)
/ 228,193 64.8% 23,516 (3) 251,709 71.5%
Non-GAAP-based gross
profit and gross
margin (%)
Operating expenses
Research and
development 38,718 (331) (1) 38,387
Sales and
marketing 67,977 (1,653) (1) 66,324
General and
administrative 28,742 (865) (1) 27,877
Amortization
of acquired
customer-
based
intangible
assets 17,147 (17,147) (2) -
Special
charges 2,269 (2,269) (4) -
GAAP-based
income from operating
operations margin (%)
and
operating
margin (%)
/Non-
GAAP-based
income from
operations
and 67,235 19.1% 45,781 (5) 113,016 32.1%
Other income
(expense),
net 1,541 (1,541) (6) -
Provision
for
(recovery
of) income
taxes 3,153 12,037 (7) 15,190
GAAP-based
net income
/Non-
GAAP-based
net income 61,108 32,203 (8) 93,311
GAAP-based
earnings
per share / $1.04 $0.54 (8) $1.58
Non GAAP-based
earnings per
share-diluted
(1) Adjustment relates to the
exclusion of share based
compensation expense from
our Non-GAAP-based
operating expenses as this
expense is excluded from our
internal analysis of
operating results.
(2) Adjustment relates to the
exclusion of amortization
expense from our Non-GAAP-
based operating expenses as
the timing and frequency of
amortization expense is
dependent on our
acquisitions and is hence
excluded from our internal
analysis of operating
results.
(3) GAAP-based and Non-GAAP-
based gross profit stated in
dollar, and gross margin
stated as a percentage of
revenue.
(4) Adjustment relates to the
exclusion of Special charges
from our Non-GAAP-based
operating expenses as
Special charges are
generally incurred in the
periods following the
relevant acquisitions and
are not indicative or
related to continuing
operations and are therefore
excluded from our internal
analysis of operating
results.
(5) GAAP-based and Non-GAAP-
based income from operations
stated in dollar, and
operating margin stated as a
percentage of revenue.
(6) Adjustment relates to the
exclusion of Other income
(expense) from our Non-
GAAP-based operating
expenses as Other income
(expense) relates primarily
to the transactional impact
of foreign exchange and is
generally not indicative or
related to continuing
operations and is therefore
excluded from our internal
analysis of operating
results.
(7) Adjustment relates to
differences between the
GAAP-based tax provision of
approximately 5% and a Non-
GAAP-based tax rate of 14%;
these rate differences are
due to the income tax
effects of expenses that are
excluded for the purpose of
calculating Non-GAAP-based
adjusted net income.
(8) Reconciliation of Non-GAAP-
based adjusted net income to
GAAP-based net income:
Three Months
Ended
December 31,
2012
-------------
Per share
diluted
---------
Non-GAAP-based net income $93,311 $1.58
Less:
Amortization 40,338 0.68
Share-based compensation 3,174 0.05
Special charges 2,269 0.04
Other (income) expense, net (1,541) (0.03)
GAAP-based provision for
(recovery of) income taxes 3,153 0.05
Non-GAAP-based provision
for income taxes (15,190) (0.25)
GAAP-based net income $61,108 $1.04
======= =====
Reconciliation of selected GAAP-based measures to Non GAAP-based measures for the six months ended December 31, 2012.
(In thousands except for per share amounts)
------------------------------------------
Six Months Ended
December 31, 2012
-----------------
GAAP- GAAP-based Measures Adjustments Note Non-
based GAAP-
based Non-GAAP-based Measures
Measures % of Revenue Measures % of Revenue
-------- ------------ -------- ------------
Cost of revenues:
Cloud
services $35,928 $(30) (1) $35,898
Customer
support $54,100 $(145) (1) $53,955
Professional
service and
other 99,294 (365) (1) 98,929
Amortization
of acquired
technology-
based
intangible
assets 46,973 (46,973) (2) -
GAAP-based
gross
profit and
gross
margin (%)
/ 432,580 63.8% 47,513 (3) 480,093 70.8%
Non-GAAP-based gross
profit and gross
margin (%)
Operating expenses
Research and
development 78,624 (669) (1) 77,955
Sales and
marketing 132,492 (3,319) (1) 129,173
General and
administrative 55,706 (1,748) (1) 53,958
Amortization
of acquired
customer-
based
intangible
assets 34,399 (34,399) (2) -
Special
charges 11,823 (11,823) (4) -
GAAP-based
income from operating
operations margin (%)
and
operating
margin (%)
/Non-
GAAP-based
income from
operations
and 107,322 15.8% 99,471 (5) 206,793 30.5%
Other income
(expense),
net 1,470 (1,470) (6) -
Provision
for
(recovery
of) income
taxes 19,372 8,335 (7) 27,707
GAAP-based
net income
/Non-
GAAP-based
net income 80,537 89,666 (8) 170,203
GAAP-based
earnings
per share / $1.37 $1.52 (8) $2.89
Non GAAP-based
earnings per
share-diluted
(1) Adjustment relates to the
exclusion of share based
compensation expense from
our Non-GAAP-based
operating expenses as this
expense is excluded from our
internal analysis of
operating results.
(2) Adjustment relates to the
exclusion of amortization
expense from our Non-GAAP-
based operating expenses as
the timing and frequency of
amortization expense is
dependent on our
acquisitions and is hence
excluded from our internal
analysis of operating
results.
(3) GAAP-based and Non-GAAP-
based gross profit stated in
dollar, and gross margin
stated as a percentage of
revenue.
(4) Adjustment relates to the
exclusion of Special charges
from our Non-GAAP-based
operating expenses as
Special charges are
generally incurred in the
periods following the
relevant acquisitions and
are not indicative or
related to continuing
operations and are therefore
excluded from our internal
analysis of operating
results.
(5) GAAP-based and Non-GAAP-
based income from operations
stated in dollar, and
operating margin stated as a
percentage of revenue.
(6) Adjustment relates to the
exclusion of Other income
(expense) from our Non-
GAAP-based operating
expenses as Other income
(expense) relates primarily
to the transactional impact
of foreign exchange and is
generally not indicative or
related to continuing
operations and is therefore
excluded from our internal
analysis of operating
results.
(7) Adjustment relates to
differences between the
GAAP-based tax provision of
approximately 19% and a Non-
GAAP-based tax rate of 14%;
these rate differences are
due to the income tax
effects of expenses that are
excluded for the purpose of
calculating Non-GAAP-based
adjusted net income.
(8) Reconciliation of Non-GAAP-
based adjusted net income to
GAAP-based net income:
Six Months Ended
December 31,
2012
-------------
Per share
diluted
---------
Non-GAAP-based net income $170,203 $2.89
Less:
Amortization 81,372 1.38
Share-based compensation 6,276 0.11
Special charges 11,823 0.20
Other (income) expense, net (1,470) (0.02)
GAAP-based provision for
(recovery of) income taxes 19,372 0.33
Non-GAAP-based provision
for income taxes (27,707) (0.48)
GAAP-based net income $80,537 $1.37
======= =====
(3) The following tables provide
a composition of our major
currencies for revenue and
expenses, expressed as a
percentage, for the three
and six months ended
December 31, 2013 and 2012:
Three Months Ended Three Months Ended
December 31, 2013 December 31, 2012
----------------- -----------------
Currencies % of Revenue % of Expenses* % of Revenue % of Expenses*
EURO 29% 19% 26% 16%
GBP 8% 9% 8% 8%
CAD 6% 17% 6% 19%
USD 46% 40% 48% 43%
Other 11% 15% 12% 14%
--- --- --- ---
Total 100% 100% 100% 100%
=== === === ===
Six Months Ended Six Months Ended
December 31, 2013 December 31, 2012
----------------- -----------------
Currencies % of Revenue % of Expenses* % of Revenue % of Expenses*
---
EURO 28% 18% 25% 16%
GBP 8% 9% 8% 8%
CAD 6% 17% 6% 18%
USD 48% 41% 49% 44%
Other 10% 15% 12% 14%
--- --- --- ---
Total 100% 100% 100% 100%
=== === === ===
* Expenses include all cost of
revenues and operating
expenses included within
the Consolidated Statements
of Income, except for
amortization of intangible
assets, share-based
compensation and Special
charges.
SOURCE Open Text Corporation
